Kip Mcgrath Education Centres Limited ("KME")

[steve fleming]

KME looks pretty cheap given strong growth and earnings outlook on the back of successful restructuring initiatives, business expansion and positive commentary from Directors:
“The company is budgeting an increased profit in FY 2014 with increased revenue from the major initiatives”.

$6.6m m/c + $1.2m net debt = $7.8m EV ; so with FY13 EBITDA at $1.2m = 6.5x FY13 EBITDA. [say compared to RDH trading at 14 x FY13 EBITDA]

Paying down bank debt from their strong surplus cash with all convertible notes now converted, so only $2.2m in bank debt remains (annual saving of $150k in interest).
Net debt of $1.2m now represents approx 1x EBITDA.

Given the royalty model, KME just need to sit back and collect the $’s for the bulk of their revenues (as well as provide a few services!)….will also benefit from a declining AUD

Management expect the high margin on-line tutoring services to scale up to contribute 15% of total revenues over the next 3 years and 50% over 5 years

http://www.dailytelegraph.com.au/newslocal/parramatta/kip-mcgrath-education-centres-teaming-up-with-google-to-give-education-help-through-helpouts-by-google/story-fngr8il0-1226758113220

http://www.theaustralian.com.au/technology/google-helpouts-personal-helpdesk-works-via-video-streaming/story-e6frgakx-1226754533535#

[stoploss]

HI Steve,
I have 50000 of these purchased recently but it took like 2 weeks to get them the liquidity is terrible. Anyway happy to hold.

[steve fleming]

HI Steve,
I have 50000 of these purchased recently but it took like 2 weeks to get them the liquidity is terrible. Anyway happy to hold.

Hi SL
good to know there are others on board!

There is actually an ice-berg seller at 15c/16c, keeps on reloading....I have been trying to fight it this week, but now have 300,000 and am out of ammo

so there is an opportunity at the moment to get in at around 15c/16c

[stoploss]

Hi SL
good to know there are others on board!

There is actually an ice-berg seller at 15c/16c, keeps on reloading....I have been trying to fight it this week, but now have 300,000 and am out of ammo

so there is an opportunity at the moment to get in at around 15c/16c

OK Thanks Steve, keep you posted :)

[Corporate]

It looks to me like there are no sellers ( at least in the off market depth)? Might be hard to get any at 15c..

Looks like a good buy if you can get some.

[steve fleming]

It looks to me like there are no sellers ( at least in the off market depth)? Might be hard to get any at 15c..

Looks like a good buy if you can get some.

At close on Friday the seller had from memory about 90k at 15c and 80k at 16c (disclosed).....it always withdraws its offer at end of day....has been doing that for the last couple of weeks....should be back on Monday morning

I picked up 300k in a number of transactions, and each time the seller automatically reloaded as soon as I bought....so don't know how big the 'iceberg' is

[False Profit]

My daughter goes to Kips and we're very pleased with the change in her attitude to maths and the methods they teach to help her improve her ability. The place is always full of kids so there's no issue with take-up of "The Product". For my ten cents I'd say this is a good company, employing good people and delivering the goods as far as I can see.

KME is a stock I'll definitely be looking into.

[born2invest]

It is so up and down and unpredictable.

The only thing is has going for it is it's revenues have increased. Everything else (profits, ROA, ROE, margins, etc are fairly poor).

My sister used to go here when she was younger and for the near monopoly they have in NZ for their services, I would have thought the business would be thriving, but it has just muddled along for years.

I understand people are using the Peter Lynch type model "my daughter/son goes here and I pay so much money per hour, etc, etc"' but you really have to look at the margins and ROE to see that even with their monopoly type status and branding, they still aren't doing overly well.

[steve fleming]

Lets look at performance since 2011 when they sold their higher education business, and decided to focus on their tutoring business only, naturally if you sell a part of your business, revenues will fall. So lets look at some key metrics for the subsequent years : FY11, FY12 and FY13


　



FY11



FY12



FY 13





Revenue (m)



6.435



7.912



9.644





EBITDA (m)



-0.098



0.842



1.172



　

　

　

　





EBITDA margin (%)



-2%



11%



12%



　

　

　

　





rev growth %

　



23%



22%





EBITDA growth %

　

　



39%



　

　

　

　





Cash flow from ops



0.129



0.533



0.904





CF growth %

　



313%



70%



The revenue, EBITDA and CF growth looks pretty compelling to me

This is since they have undertaken a series of initiatives to improve their online/cloud service offerings, and more importantly, focused on expanding those franchises that pay a franchise fee as a % of student fees (up to 20%), rather than a fixed fee. Post year end , they have rolled out further online offerings, plus their tie up with google

In these types of plays, you have to put a bit more effort to understanding the story.

[steve fleming]

At close on Friday the seller had from memory about 90k at 15c and 80k at 16c (disclosed).....it always withdraws its offer at end of day....has been doing that for the last couple of weeks....should be back on Monday morning




So the 90k order from Friday is now moved up to 18c….the seller wants out, so I still think he will come back down to 15c.

[stoploss]

Lets look at performance since 2011 when they sold their higher education business, and decided to focus on their tutoring business only, naturally if you sell a part of your business, revenues will fall. So lets look at some key metrics for the subsequent years : FY11, FY12 and FY13


　

FY11


FY12


FY 13




Revenue (m)


6.435


7.912


9.644




EBITDA (m)


-0.098


0.842


1.172



　
　
　
　



EBITDA margin (%)


-2%


11%


12%



　
　
　
　



rev growth %

　

23%


22%




EBITDA growth %

　
　

39%



　
　
　
　



Cash flow from ops


0.129


0.533


0.904




CF growth %

　

313%


70%



The revenue, EBITDA and CF growth looks pretty compelling to me

This is since they have undertaken a series of initiatives to improve their online/cloud service offerings, and more importantly, focused on expanding those franchises that pay a franchise fee as a % of student fees (up to 20%), rather than a fixed fee. Post year end , they have rolled out further online offerings, plus their tie up with google

In these types of plays, you have to put a bit more effort to understanding the story.

Thanks Steve, have to be honest and say I purchased these as I have paid in NZ to another operation ( numberworks ) a reasonable sum over the past few years .So I was in the born2invest category mentioned above, however I do not think these guys have a monopoly there are a few operators in this space.I talked to a friend involved in private education , he explained that families still spent the money on the childrens education and cut back on holidays, dining out , and wine. Over the GFC they may have kept the kids in intermediate state school ( yr 7 & 8 ) instead of sending them off early to the secondary school private education. But now full on. So this is a space I am happy to be in .

[CAM]

I have not done any research on this but how would they stack up in terms of competition from the likes of the Khan Academy?

[Jay]

I have not done any research on this but how would they stack up in terms of competition from the likes of the Khan Academy?

Neither have I, however using the Peter Lynch theory I would say "who?" Don't know them, Only know of Numberworks and KME. All else being equal more or less, you have to go for what you know.

[CAM]

Sorry I meant I do know them, and use them. Have my 6 year old on it. A guy at work has his 4 yeard old on it. Its free.
Here is some info. http://en.wikipedia.org/wiki/Khan_Academy . But as an outtake...All resources are available for free to anyone around the world. Khan Academy reaches about 10,000,000 students per month and has delivered over 300,000,000 lessons
What I was querying was whether KME have a slighly different business model so could co exist alongside something like this.

[Jay]

Gotcha now CAM

[steve fleming]

What I was querying was whether KME have a slighly different business model so could co exist alongside something like this.


Models are pretty different.

KME provides personalised tutoring/exam preparation to children based on the country’s/state syllabus. A mixture of face to face, online and blended tuition with qualified teachers/tutors.

Khan provides a great service, but it is general online self-directed learning, so not personalised to the student or syllabus

KME reckon they are a global market leader in tuition (based on their resources, systems and technology) but it’s a big market, room for a number of different players / education styles

[percy]

Well it has been a long weekend for me.Tried to buy 30,000 KME on Friday afternoon at 13 cents.I was the highest bidder.Was really after 60,000 at 15cents.At 5.30pm on Friday night NZ time seller appeared at 15cents.I could not get hold of my broker.Gone for the weekend,so I missed out.Left my bid in at 13cents.Then Steve started this thread.Bugger!!! Then today you all went ahead of me.Bugger again.Then at 4.45 I saw 94,000 go through at 15cents with one buyer for a 1,000 at 15 cents.I then put in my bid for 60,000 at 15cents.Going from what is left on the bid it looks as though I got 54,676.
I rang the local Kip Mcgrath this morning.Woman has only had the franchise for a fortnight,however at a Barbie on Saturday she was talking with other local franchisee,who told her they were getting good growth and were looking to take on more franchises and put managers in.
Just received the contract note,brought 60,000 at 15cents.

[steve fleming]

So the 90k order from Friday is now moved up to 18c….the seller wants out, so I still think he will come back down to 15c.


Well that played out exactly as suspected.

Sellers dropped into the 15c bid, with more to come…and no sellers left as order again removed at end of day

Biggest volume day in KME in a while…..Wonder how many are left to come at 15c?

[steve fleming]

Well it has been a long weekend for me.Tried to buy 30,000 KME on Friday afternoon at 13 cents.I was the highest bidder.Was really after 60,000 at 15cents.At 5.30pm on Friday night NZ time seller appeared at 15cents.I could not get hold of my broker.Gone for the weekend,so I missed out.Left my bid in at 13cents.Then Steve started this thread.Bugger!!! Then today you all went ahead of me.Bugger again.Then at 4.45 I saw 94,000 go through at 15cents with one buyer for a 1,000 at 15 cents.I then put in my bid for 60,000 at 15cents.Going from what is left on the bid it looks as though I got 54,676.
I rang the local Kip Mcgrath this morning.Woman has only had the franchise for a fortnight,however at a Barbie on Saturday she was talking with other local franchisee,who told her they were getting good growth and were looking to take on more franchises and put managers in.
Just received the contract note,brought 60,000 at 15cents.

Sorry Percy!....but at least you finally got your order filled!


15c is a nice buy….I love these small, illiquid, profitable, fast growing type of stocks!


The thing with illiquid micro-caps, when volume is there, you have to take the opportunities to grab it.


Not saying this will do anything like MBE (as it lacks MBE’s supersized growth profile), but it is interesting to me that KME currently has the exact same historical valuation metrics as MBE did at 2c (m/c of $6m and EBITDA of $1.1m)

[noodles]

Well it has been a long weekend for me.Tried to buy 30,000 KME on Friday afternoon at 13 cents.I was the highest bidder.Was really after 60,000 at 15cents.At 5.30pm on Friday night NZ time seller appeared at 15cents.I could not get hold of my broker.Gone for the weekend,so I missed out.Left my bid in at 13cents.Then Steve started this thread.Bugger!!! Then today you all went ahead of me.Bugger again.Then at 4.45 I saw 94,000 go through at 15cents with one buyer for a 1,000 at 15 cents.I then put in my bid for 60,000 at 15cents.Going from what is left on the bid it looks as though I got 54,676.
I rang the local Kip Mcgrath this morning.Woman has only had the franchise for a fortnight,however at a Barbie on Saturday she was talking with other local franchisee,who told her they were getting good growth and were looking to take on more franchises and put managers in.
Just received the contract note,brought 60,000 at 15cents.

What a nightmare! Maybe time for an on-line broker?

[percy]

What a nightmare! Maybe time for an on-line broker?

Yeah right.!!!
I now have Craigs' traders after hours phone numbers.Think they are there to 6pm NZ time.!!
Thanks Steve,Yes got there in the end,but at 4.30 NZ time I thought I had missed the bus.!!
Never did buy any MBE.Think I was caught up in a cash issue,rights issue and a SPP plan at the time.

[percy]

Trades today at 19.5 and last sale 20cents.
Buyer 40,000 @ 19.5,then10,000 @ 19,then 112,24 @18cents.
Seller @30.5cents has 20,000 for sale.

[peat]

Nice work Percy. I remember 'assessing' one of these little businesses. Seemed a good one.

[DarkHorse]

Nice work Percy. I remember 'assessing' one of these little businesses. Seemed a good one.
Yikes! :eek2:Talk about illiquid - been the highest bidder from before Christmas until today, but all I've got to show for it is 'partially traded on 31st - $500 worth!

[percy]

Yikes! :eek2:Talk about illiquid - been the highest bidder from before Christmas until today, but all I've got to show for it is 'partially traded on 31st - $500 worth!

Sorry to hear that.
Trying to keep the smile off my face but can't!!
Don't worry we have all been there.!!!
The fun of trading illiquid stocks!!

[Well Endowed]

Apologies dark horse, It was me who snaffled most of yesterdays volume...:mellow:

[Huang Chung]

Damn it!

I always catch onto Steve Fleming's threads after they gain some traction. MBE was last one where I was late to the party, and now KME.

Absolutely love these little illiquid gems. My absolute favorite remains SNL (but fully price now in my view), and am still holding MBE and SND.

My latest foray into the illiquid small caps is Capilano Honey (CZZ).....a real honey pot in my view :cool:.

[Bigane]

I chased this in Oct and Nov and never got my order filled. Someone kept going half a cent ahead of me. Ended up buying MGM Wireless instead as my education sector related growth stock. Will keep an eye on KME but not going to bridge the huge gap.

[Huang Chung]

Yeah, but unless your world has been suddenly turned upside down, why would you need to massively and suddenly liquidate in any case?

[steve fleming]

I like illiquid stocks because so many people are put off them by their lack of liquidity

It means there are more opportunities to buy good stocks that people refuse to buy just because they are illiquid

inevitably, as a stock grows and its profile increases then its liquidity increases

i.e. I was the only buyer on MBE for a couple of weeks at around 2c, now six months later at 30c it trades millions a day

Of course if you want to get out, then you are in trouble, but it just means there is more pressure to get your research right, and make sure you back companies that have strong medium to long term fundamentals so you can ride out the short term lack of liquidity

[DarkHorse]

Sorry to hear that.
Trying to keep the smile off my face but can't!!
Don't worry we have all been there.!!!
The fun of trading illiquid stocks!!
Cheers Percy - cheered me up somehow (particularly coming from one of the posters whose advice I follow most avidly). Just checked my email and snaffled some more - 150 this time - $28 worth :t_up:

[DarkHorse]

I like illiquid stocks because so many people are put off them by their lack of liquidity

It means there are more opportunities to buy good stocks that people refuse to buy just because they are illiquid

inevitably, as a stock grows and its profile increases then its liquidity increases

i.e. I was the only buyer on MBE for a couple of weeks at around 2c, now six months later at 30c it trades millions a day

Of course if you want to get out, then you are in trouble, but it just means there is more pressure to get your research right, and make sure you back companies that have strong medium to long term fundamentals so you can ride out the short term lack of liquidity
I take your point in terms of general strategy (and thank you by the way for the MBE tip!). Having not invested in companies this 'micro micro' with such a huge spread before, do you have any suggestions on buying tactics for this one right now? I know it's an art not a science but it's often hard to tell if a price lift is a one-off or part of an upward trend (I missed a lot of MBE gains for example by being 'patient' with a reasonable bid...)

[steve fleming]

I take your point in terms of general strategy (and thank you by the way for the MBE tip!). Having not invested in companies this 'micro micro' with such a huge spread before, do you have any suggestions on buying tactics for this one right now? I know it's an art not a science but it's often hard to tell if a price lift is a one-off or part of an upward trend (I missed a lot of MBE gains for example by being 'patient' with a reasonable bid...)

It depends on 1) how patient you are; and 2) how much you want the stock

I am generally pretty patient and am happy to wait until an opportunity presents itself to buy when volume is available (as it was in early Dec for KME)

With a stock like KME where there is not a lot of price sensitive news, it generally has its major moves following the half year and full year results....so if you expect the half year result in Feb to be disappointing then best wait till after the results are released, if you think it will be a good one then see if you can get a holding before the results in the next 6 weeks or so.

getting positions in illiquid stocks can be a bit like fishing - there are sellers out there (i.e. with KME at the moment there is 20k @30.5), but sometimes in order to reel them in, you have to tempt them by playing round with your bids a little and seeing if the sellers are willing to compromise.

But first you need to do your research and determine what price you are willing to bid up to.

[DarkHorse]

Great advice thank you Steve, much appreciated.

[percy]

Yeah right.!!!
I now have Craigs' traders after hours phone numbers.Think they are there to 6pm NZ time.!!
Thanks Steve,Yes got there in the end,but at 4.30 NZ time I thought I had missed the bus.!!
Never did buy any MBE.Think I was caught up in a cash issue,rights issue and a SPP plan at the time.

Oh Jesus Percy you have done it again.!!!
Been hanging around trying to buy 5000 AKG at 92cents for the last couple of days.Was prepared to go to 96cents. Bloody hell seller at 96 cents appears at 5.15 NZ time.
So rang Craig's trading desk.Not pleased to receive my call.!!! Did tell them it is the first /only time in 40 years.!!!!!!
Must ring my advisor on his cell phone in future.Will do in future.Thank you..!!!!!!!!!!!!!!\\
Well am now the proud owner [even if told off] of 5000 AKG at 96cents.!!!

[steve fleming]

KME’s now live online tutoring services in conjunction with google:

https://helpouts.google.com/102926021511725784340


87c / min, I guess it all adds up.

[steve fleming]

KME have reduced their debt by about half since 30 June 2013 ($3.8m to $2.0m) through the conversion of the notes ($1.5m) and repayment of bank debt ($300k)

This represents interest saving of about $100k

Then there is revenue growth from new centres that have come on board; existing centres that have converted to the full service gold model; and existing centres that have switched to % of revenue from flat fee

So hopefully a decent up lift in both top and bottom line

[Huang Chung]

My latest foray into the illiquid small caps is Capilano Honey (CZZ).....a real honey pot in my view :cool:.

Probably should have it's own thread, but I imagine there wouldn't be much interest in this tiddler.

Anyhow, a the half yearly report seems quite encouraging.

http://stocknessmonster.com/news-item?S=CZZ&E=ASX&N=781514

[percy]

Probably should have it's own thread, but I imagine there wouldn't be much interest in this tiddler.

Anyhow, a the half yearly report seems quite encouraging.

http://stocknessmonster.com/news-item?S=CZZ&E=ASX&N=781514

"In view of the vagaries of the agricultural market."
"The Australian crop has suffered considerably from unfavourable weather conditions that have impacted production,such as the recent drought and heat waves."
An awful lot of areas outside the company's control.Add to that false labeling of Manuka honey on the world markets,plus currency fluctuations means too many challenges for me.

[Joshuatree]

looks like you've had a good gain there HC. looks like the longer term global demand for high UMS honey will underpin things.

[Huang Chung]

Yeah, a nice little gain Josh. Took some profits, so all's good.

Anyhow, better not hijack the Kip McGrath thread entirely......

[Huang Chung]

Yeah, a nice little gain Josh. Took some profits, so all's good.

Anyhow, better not hijack the Kip McGrath thread entirely......

[percy]

Yeah, a nice little gain Josh. Took some profits, so all's good.

Anyhow, better not hijack the Kip McGrath thread entirely......

No one here minds.In fact I think others will be like me and enjoying it.!
And well done.Pure nectar,.!!

[Well Endowed]

half year report out:

http://www.asx.com.au/asxpdf/20140213/pdf/42mpvn0pkkryg1.pdf


Look pretty reasonable, borrowings paid down over the period, less going to interest expense. other metrics (Rev, EBITDA & Profit all up significantly - in percentage terms).

Thoughts?

[steve fleming]

half year report out:

http://www.asx.com.au/asxpdf/20140213/pdf/42mpvn0pkkryg1.pdf


Look pretty reasonable, borrowings paid down over the period, less going to interest expense. other metrics (Rev, EBITDA & Profit all up significantly - in percentage terms).

Thoughts?

"Our financial performance has been robust during the 6 month period, with
revenue growing by 29% to $5.714 million and EBITDA improving to $519,000,
up nearly 75% on the same period last year. As indicated in the last Annual
Report, the company has budgeted for an increased profit in FY 2014 compared
to the prior year and we remain on track to achieve that outcome."

Fantastic growth in revenue (significantly above my estimates, although I though there would be a larger uplift in UK earnings) but EBITDA was below (underestimated the variable nature of some key expenses)

Strong period of FCF generation (and reduced CAPEX) with net debt reduced to $1m (from $3m at 30 June). Looks like dividends are on track to be restored from next year.

Historically the business has had its earnings strongly weighted to the second half (FY12: 62%, FY13: 75%). So on track for FY14 EBITDA of around $1.25m to $1.5m, so starting to get reasonably chunky. At 25c, on about 8x FY14 EBITDA, so nice potential for a re-rate as earnings continue to increase.

Great little company, and I am very happy to be a top 20 shareholder in it.

[percy]

Thanks as always Steve.

[Well Endowed]

Thanks Steve, some good points there, a shame I didn't get more!

[steve fleming]

Hi SL
good to know there are others on board!

There is actually an ice-berg seller at 15c/16c, keeps on reloading....I have been trying to fight it this week, but now have 300,000 and am out of ammo

so there is an opportunity at the moment to get in at around 15c/16c

Touched 30c / 31c today, but probably got a little ahead of itself...will probably come back once the excitement fades.

Still, the big off load at 15c and 16c back in December turned out to be a real gift

[stoploss]

PIE Funds management joining the top 20 as well Steve, 5.8 Mio shares @ 17.5 cps.

[percy]

Wel that is interesting.Paid 17.5cents,so PIE Funds are doing well already.
Good on you Pie Funds.

[Joshuatree]

Happy to have 3 slices; less paint drying time here and less stress; still read your posts tho:t_up:

[percy]

Happy to have 3 slices; less paint drying time here and less stress; still read your posts tho:t_up:

Now that post just made my day.!!! lol.

[steve fleming]

PIE Funds management joining the top 20 as well Steve, 5.8 Mio shares @ 17.5 cps.

Good to see - should help with the profile

KME are not big on promoting themselves (which is good), but it always helps getting the story out to a wider audience

When the ACN gang start talking about it (which they haven't yet for KME) then you know the story is starting to get out there

[steve fleming]

5 year high today.

Though the 10 year high (approx $3.00) is a little way off!

[percy]

5 year high today.

Though the 10 year high (approx $3.00) is a little way off!

I am holding myself "at the ready." lol.

[steve fleming]

http://www.fool.com.au/2014/03/26/beat-the-big-fund-managers-with-these-3-rocketing-microcaps/

claude walker with some good observations on KME

[percy]

http://www.fool.com.au/2014/03/26/beat-the-big-fund-managers-with-these-3-rocketing-microcaps/

claude walker with some good observations on KME

Thanks for the link Steve.I found it good reading,and the bonus was AZV was also covered.

[percy]

5 year high today.

Though the 10 year high (approx $3.00) is a little way off!

Does 37cents indicate we are on the right trajectory?!!

[stoploss]

Does 37cents indicate we are on the right trajectory?!!

PIE doubled his money rather quickly !!!!!! Not wanting to upset the profit gods but looks like if we can clear the 40 cent hurdle there is a bit of blue sky in front of us .....

[baller18]

42 cents!!!

[Well Endowed]

I'm out at 42c, has been a great ride since 20c, but these levels are too good, not too. Might look at a reentry if it falls back a bit :)

[steve fleming]

PIE now has 19% and no board reps

Editure now has 13% and 2 board reps

PIE have already stated this is a private equity type investment for them.

Wonder if they take it to the next step and seek some board representation/control?

Might restrict their trading activities a bit, but would fit with their innovative funds management approach

[DarkHorse]

I hear that several Auckland franchisees are so disillusioned with the way management has treated them recently, that they're cutting their ties with KME and will just offer tuition independently.

[Joshuatree]

Any more details there DH?. One pays a lot for a franchise and doesn't just walk away, lots of signed commitments and obligations.,

[Joshuatree]

7 established centres currently for sale 2 in Auckland , Papakura and Henderson.

[Joshuatree]

10 new ones for sale NZ

In Aus 9 established franchises for sale
138 new ones for sale

[DarkHorse]

You're dead right about franchises. Sorry to be a tease but it wouldn't be fair to say any more than that.

[Well Endowed]

28/30c, interesting points darkhorse. might awhile longer before considering a re-entry.

[Entrep]

Right back to 21c now

[percy]

Down 24% on no news, what's going on?
On the bright side, this means I'm gaining on Percy in the ST competition LOL

About time you or Steve Fleming beat me.Last two years I have finished ahead of both of you using a mixture of your recommendations!!!!
KME.Would appear someone wants out in a big hurry.Time will tell whether they know more than us!!
Not surprised EBT moved ahead on a good update after I sold.[At least the HNZ in NZ I brought with the proceeds have moved up too.]

[Joshuatree]

Question: Are the new centres being operated (i.e. earning income) until a franchise buyer is found?

From their websites approx
11/6/14 NZ Established centres for sale 7 27/6/14 7 for sale
11/6/14 NZ new centres f/sale 10 27/6/14 10 for sale

11/6/14 Aus 9 estab centres f/sale . 27/6/14 10 for sale
11/6/14 Aus 138 new f/sale 27/6 /14 132 f/sale 2 deposits received and 2 statements of int

[steve fleming]

I hear that several Auckland franchisees are so disillusioned with the way management has treated them recently, that they're cutting their ties with KME and will just offer tuition independently.

Come on NZ franchises - move with the times!!:)

"Centre numbers have declined slightly with the final stages of our technology and contract conversion, particularly in theNew Zealand and Singapore markets, where older style centres are not making the change. However this is not impactingon revenues or earnings and we continue to push to complete the transition globally. "

Luckily, "Australasian revenue has risen by 46% to $8.232 million this year with a continuation of the move to percentage of revenuecontracts for most centres " and "UK and European revenues are up 11% to $3.632 million".

Now lets see how the online strategy plays out, and wait for the dividends to start soon....well done KME

[percy]

Come on NZ franchises - move with the times!!:)

"Centre numbers have declined slightly with the final stages of our technology and contract conversion, particularly in theNew Zealand and Singapore markets, where older style centres are not making the change. However this is not impactingon revenues or earnings and we continue to push to complete the transition globally. "

Luckily, "Australasian revenue has risen by 46% to $8.232 million this year with a continuation of the move to percentage of revenuecontracts for most centres " and "UK and European revenues are up 11% to $3.632 million".

Now lets see how the online strategy plays out, and wait for the dividends to start soon....well done KME

It is well done KME and well done Steve Fleming.You have done it again!

[Joshuatree]

Come on NZ franchises - move with the times!!:)

"Centre numbers have declined slightly with the final stages of our technology and contract conversion, particularly in theNew Zealand and Singapore markets, where older style centres are not making the change. However this is not impactingon revenues or earnings and we continue to push to complete the transition globally. "

Luckily, "Australasian revenue has risen by 46% to $8.232 million this year with a continuation of the move to percentage of revenuecontracts for most centres " and "UK and European revenues are up 11% to $3.632 million".

Now lets see how the online strategy plays out, and wait for the dividends to start soon....well done KME

Yes was a case of myopia in Godszone and the blind leading the blinding in our little bubble. I missed an entry by a few hours on the Editure selldown. Pie funds indicated Editure couldn't find anyone else to unload the rest of their KME holdings to.Maybe they will now.

[Entrep]

This is building a very nice base around 30-32c.

[percy]

From The Chairman's AGM speech;
"Supported by a much improved financial position,our strategy going forward will deliver increased profits through the provision of our enhanced service offering to our global network."
Sounds positive enough. No projections given,so we will have to wait until the end of February for the half year to see how they are performing.

[percy]

On HC, that very highly respected poster Imran Khan, has posted an interesting article on KME.
All there,where they came from, and where they are going to.

[percy]

Not a lot of shares traded.[29,124] but the astute buyer has cleaned out all the sellers.!

[stoploss]

Not a lot of shares traded.[29,124] but the astute buyer has cleaned out all the sellers.!

I'll put a 40 target up .. :)

[percy]

I'll put a 40 target up .. :)

And so it came to pass that a seller appeared at 40 cents.!

[percy]

Saw this the other day.
http://www.stuff.co.nz/marlborough-express/news/65411105/Kip-McGrath-closes-in-Blenheim

Thanks for the link KW.
We will most probably see more such notices as KME move more of their business on line.
The next six months to a year will determine whether the move to on line tutoring is working or not.
Having seen school libraries getting boys to read via tablets, rather than books,I feel the online model is the correct way to go.
It will then be very scalable,which will be most rewarding to us KME shareholders.

[percy]

Great result out today.
But wait there's more............... They are going to pay a divie......
The chairman's commentary is very enlightening for any one trying to understand how KME are transforming themselves from classroom to online.
Although early days I feel they are on track,and the model will be able to be scaled up with fantastic results.

[percy]

Well Storm McGrath must have come over well when he presented at the Pie conference.
Buyers have taken out all the sellers,and the last sale was at 41 cents !!!!

[noodles]

Well Storm McGrath must have come over well when he presented at the Pie conference.
Buyers have taken out all the sellers,and the last sale was at 41 cents !!!!
Fair dinkum, ripper! Even me, a late comer to the party is enjoying a decent profit. Should have listened to you 6 months ago.
While FY15 profit will assign a reasonable pe and yield, the real story will be the growth in FY16 as the gold franchises and on-line contribute.
I was at the pie conference and had a chance to talk to Storm. He is clearly passionate about the what they do and very much focused on making it a successful business. Storm has really turned the business around and he is always looking for opportunities to leverage the product. We should see some new initiatives that leverage the online platform to drive further growth along with new master franchises in new territories.

[percy]

Fair dinkum, ripper! Even me, a late comer to the party is enjoying a decent profit. Should have listened to you 6 months ago.
While FY15 profit will assign a reasonable pe and yield, the real story will be the growth in FY16 as the gold franchises and on-line contribute.
I was at the pie conference and had a chance to talk to Storm. He is clearly passionate about the what they do and very much focused on making it a successful business. Storm has really turned the business around and he is always looking for opportunities to leverage the product. We should see some new initiatives that leverage the online platform to drive further growth along with new master franchises in new territories.

Thanks for the update Noodles.
Appears we are well positioned.!!!! lol.

[percy]

May I extend a warm welcome to the new bidder for 100,000 shares at 40 cents.

[percy]

May I extend a warm welcome to the new bidder for 100,000 shares at 40 cents.

Nice to see he/she/it/up their bid to 41 cents.
I wonder whether they will increase it to 42 cents to take out the keen seller with 337 shares?
Then if they get the buying bug they may take the seller with 3,000 out at 43 cents>>..??

[percy]

And so it to pass that 20,000 shares went through at 44 cents today.If it is a new shareholder,welcome.!!!

[noodles]

Mike King over at fool.com give KME a mention in this post
http://www.fool.com.au/2015/04/23/2-top-quality-education-stocks-to-add-to-your-watchlist/

[percy]

Share price today at 55cents appears to have reacted to Imran Khan's HC posts on the excellent progress KME are having building their "Gold Partners."
Well worth a read.Imran Khan's posts are always spot on.

[percy]

The result came out late Friday afternoon.
Was very much under expectations,and I guess the SP with get smashed tomorrow.
I was trying to work out what they worth,and whether to let mine go or not,
and surprised myself with the following figures.
The PE is 18.Revenue growth was 18.5%.
NPAT was up 47%.
Basic eps was up 42.6%.
Diluted eps was up 39.3%
Dividend increased.
And the potential "blue skies" are still there ,just taking a little longer to achieve.

[winner69]

Down 10% post announcement

Were there high expectations of a better result than this?

[stoploss]

Percy I hope not too much of a smashing , they already went from 55.5 to 44 ... Been away for the weekend . Did I see somewhere despite the negative reaction they are doing well enough to pay a dividend ?

[percy]

Percy I hope not too much of a smashing , they already went from 55.5 to 44 ... Been away for the weekend . Did I see somewhere despite the negative reaction they are doing well enough to pay a dividend ?


This dividend is 1 cent.Exdate 31/8/2015.Record date 2/9/2015 Payment date 18/9/2015.
KME started paying dividends with the half cent dividend per share we received in March.
Yes,when I saw good volume going through at 55 cents I thought $1 here we come!!!!!!!!!!!!!!!!!! Was well positioned.!!
Price on Monday?? Well the Aussie's are either " all go" or "all woe".Let's see how woeful they can be.
Interesting the market cap is only $19.44mil at 44cents.OK the risks have gone up considerabily,but the potential rewards are still there!
I am retaining my shares.

[mark100]

While it was below expectations, those expectations were probably a bit overblown. I don't recall the company making any huge forecasts, but many were probably hoping for the same level of seasonality seen in the past. For a company that just increased NPAT by almost 50% and still has growth options I wouldn't say 18x historical profit is outrageous. I have a small holding so a potentially biased view.

[mark100]

That depends on what NPAT growth is going FORWARD not past. If growth is sub 20% then potentially its expensive. And the market is in the midst of a harsh P/E compression cycle. I'd also be cautious about them missing estimates, if business is dropping off the next half might be even slower.

Yes very true

[percy]

The commentaries provided by Kip and Storm are positive, and maybe best summed up;
"Financial results are encouraging, and suggest the strategic course we have set is the right one."

[stoploss]

Bit of activity in this space ...

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11670185

[percy]

Strong earnings update today should make large shareholder Pie Funds very happy.

[Joshuatree]

Thats transparent , great stuff.
The Chairman, Kip McGrath, wishes to advise the market that he intends to sell shares over the next 4 years at an
average rate of 45,500 shares per month.
This would result in the sale of less than 15% of his holdings over a 4 year period.

Not holding atpit.

[stoploss]

Been rip roarng last few days and would appear to be a leak ..... now a speeding ticket . They have coughed up that they are "looking at a number of strategic options and is engaged in preliminary discussions "
Pie Funds did hold 15 % , be a good start to the year for them ....

[levin123]

Been rip roarng last few days and would appear to be a leak ..... now a speeding ticket . They have coughed up that they are "looking at a number of strategic options and is engaged in preliminary discussions "
Pie Funds did hold 15 % , be a good start to the year for them ....

Great well run little company, hoping they won't go private

[stoploss]

Volume is pretty light today , but going higher +8.5 cents ,@ 158.5 currently .

[stoploss]

Butchered today - 33 cents to $ 1.06.
Won’t be a good month for Pie Funds .

[percy]

Yes butchered.

[Joshuatree]

Ran up from re $1.26 to $1.40 (insider buying?) prior takeover talk annoucement then to re $1.52 after annoucement.Now good profit annoucement and div and we have $1.06!.. Need to hold to my decision to stay largely out of mkt at present but its hard when one sees what looks like very good value emerging.

[Tronald Dump]

Ran up from re $1.26 to $1.40 (insider buying?) prior takeover talk annoucement then to re $1.52 after annoucement.Now good profit annoucement and div and we have $1.06!.. Need to hold to my decision to stay largely out of mkt at present but its hard when one sees what looks like very good value emerging.

Not so sure it was a 'good' announcement - EBITDA up 12.8% but NPAT and EPS down. The commentary and outlook statements are a bit wishy washy too:

"Lesson numbers for the half have increased globally and whilst lower than budget, we expect this will correct in thehistorically stronger second half."
"Online tutoring growth, although slower than expected...."
"The second half has always been stronger than the first half and this year should be no different."

This was trading on a PE of 28 before the drop, and is still on a PE of 19 now. Does it deserve a higher PE than that?

[Joshuatree]

What ive been reading is profit could have been alot higher but they've chosen to put a lot of dough into systems and related infrastructure for long term growth.

S/P Bounced up 12 % atp on another big down day. on the ASX.

[Tronald Dump]

What ive been reading is profit could have been alot higher but they've chosen to put a lot of dough into systems and related infrastructure for long term growth.

S/P Bounced up 12 % atp on another big down day. on the ASX.

Sure, but bouncing on small volume ($130k so far today). I'm just not convinced by two factual statements about growth being lower than expected, followed by a hopeful "should" be higher in H2. Time will tell I guess.

[Joshuatree]

Im a watcher atm largely out of the mkt. Laters.

[Tronald Dump]

Im a watcher atm largely out of the mkt. Laters.
The bounce is going well...probably heading to reasonable value. Laters.

[stoploss]

HALTED. Raising cash , a little at odds with recent commentary , and they have the cancelled dividend money as well.

[stoploss]

Bit of an update ....upgrade ? yesterday .
https://stocknessmonster.com/announcements/kme.asx-2A1251608/
+20 % today back to $ 1.20